TaxTMI 
TaxTMI 
2019 (6) TMI 670
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..... The additional grounds raised by the assessee read as under: "1. The notice issued u/s 274 r.w.s 271 of the Income Tax Act, 1961 in PAN: AABCG7552M dated-25-09-2009 in the case of the appellant for A,Y.2004- 05 is ambiguous as the Assessing Officer didn't specify the grounds on which penalty was imposed i.e., whether for concealment of income or for furnishing inaccurate particulars. 2. The Assessing Officer erred in passing a re-assessment order u/s 143(3) r.w.s 263 in the absence of any direction to redo the assessment by the Commissioner of Income tax. Hence the initiation of penalty proceedings u/s 271(1)(C) on 25.09.2009 is not valid at every stage of modification of the assessment." 3. On the other hand, the Ld.DR opposed for admission of additional grounds. 4. We have heard the rival contentions and agree with the Ld.AR that the additional grounds raised by the assessee are purely legal grounds which do not require any specific investigation. Hence, the additional grounds raised by the assessee are admitted. 5. We first take up the additional ground No.1 which is a pure legal issue. The assessee filed the return of income declaring total inco....
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....art of the order of Hon'ble High Court which reads as under : "10. A copy of the proforma notice under section 271 read with section 274 of the Act of 1961 addressed to the assessee on March 22, 2013 is produced. Perusal thereof reflects that the irrelevant contents therein, which had no application to the assessee, were struck out leaving only one clause which reads as under : "Whereas in the course of proceedings before me for the assessment year 2010-11 it appears to me that you have concealed the particulars of your income or furnished inaccurate particulars of such income." 11. It would be apposite at this stage to consider the judgment of the Karnataka High Court in Manjunatha Cotton & Ginning Factory's (supra). Therein, a Division Bench of the Karnataka High Court observed that section 271 of the Act of 1961 is a specific provision providing for imposition of penalties and is a complete code in itself regulating the procedure for such imposition. The Bench therefore held that penalty proceedings have to be conducted in accordance therewith, subject always to the rules of natural justice. It was pointed out that section 271 mak....
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....able to be struck down. 13. Smt. Kiranmayee, learned counsel, placed reliance on the judgment of the Supreme Court in K.P. Madhusudhanan v. CIT [2001] 118 Taxman 324/251 ITR 99. Therein, the Supreme Court held that it is not necessary for the Assessing Officer, while issuing a notice under section 271(1)(c), to expressly invoke Explanation 1(B) appended to the provision. It is however relevant to note that Explanation 1(B) merely adverts to a case of failure of an assessee to substantiate the explanation offered whereby the amount added or disallowed while computing the total income of such person for the purposes of the penalty provision shall be deemed to represent the income in respect of which particulars had been concealed. The Supreme Court observed that the statutory provision included the "Explanation" and once the assessee was put on notice, no express invocation of the "Explanation" is necessary. 14. This judgment has no application to the case on hand as what we are concerned with presently is whether the assessee is required to be put on notice as to whether she is to be penalised for concealment of particulars of income or for furnishing inaccurate pa....
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..... This ambiguity in the show-cause notice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. 18. We are therefore of the opinion that the order under appeal does not brook interference on any ground. We find no question of law, much less a substantial one, arising for consideration warranting admission of this appeal." 8. Since the facts are identical and the AO did not specify for which act of charge or offence, the penalty was initiated, respectfully following the decision of Hon'ble High Court, the notice issued u/s 271(1)(c) is to be held as invalid. Accordingly, we quash the notice issued u/s 271(1)(c) and cancel the orders of the lower authorities and allow the appeal of the assessee. Since we have quashed the notice and cancelled the consequent orders of lower authorities, we consider it is not necessary to adjudicate the other grounds raised by the assessee. 9. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 12th June 2019. ============= Document 1 NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 63 ....